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Sources say that the Balochistan government has already decided to run the project on its own and allocated Rs8 billion for it in the budget. - File photo

QUETTA: The Balochistan government has suffered a loss of about $1 billion because of alleged failure of the Tethyan Cooper Company to honour an agreement it had signed for exploration of copper and gold in Reko Diq area.

“Tethyan Copper Company Australia (TCCA) has violated the agreement,” a source in the office of Advocate General Balochistan alleged while talking to Dawn on Tuesday.

He dispelled a perception that the company was trying to create through newspapers that it had suffered a financial loss of about $10 billion because of non-issuance of mining licence to the company.

“The provincial government can file a case against the company for compensation because it has deprived the province of one billion dollars,” the source said.

He denied that the Balochistan mines and mineral department had refused to give mining licence to TCC Australia and said the company had so far not applied for it.

“The Balochistan government has denied giving licence to TCC Pakistan,” the source said, adding that the TCCP had not signed any
agreement with the provincial government about exploration in the Reko Diq cooper-cum-gold project in Chagai.

The first agreement about exploration work was signed by a US company, BHP, with the Balochistan Development Authority (BDA) in 1993. The company was allotted 13,000 square-kilometre area in Reko Diq to start exploration work.

The fee of the land was fixed at only one rupee per sq-km which was not paid to the provincial government as the company had managed to get the amount waived off, causing a loss of millions of rupees to Balochistan.

The rules were also violated in the allocation of land. According to mining rules, no company can be allocated more than 100 sq-km of land for exploration.

BHP did not start exploration work and after initial assessment of quantity of cooper and gold handed it over to another company, Mincor, on the pretext of relaxation by getting more than $294 million.

“BHP did not take the Balochistan government into confidence about its deal with another company, depriving the province of financial benefit that it (BHP) had earned by assigning the job to another company,” sources said, adding that Mincor had later handed over the project to two other companies — Barrack Gold of Canada and Antofagasta, a Chilean-based company, which registered another company with the name of TCC in Australia.

TCCA signed another agreement and chose only 900 sq-km area for exploration instead of 13,000 sq-km in Reko Diq. The sources said these companies had in 2000 set up TCC in Pakistan in violation of existing laws — not registering it with the Security and Exchange Commission of Pakistan — depriving the national exchequer of billions of rupees in tax.

According to the sources, the company again surrendered the allotted area and said it would work on 424 sq-km area. According to the agreement, it was bound to submit its feasibility report by Feb 19, 2011, as its exploration licence had bee renewed for six years.

The feasibility report submitted by the company, the sources said, showed that it had worked only on five sq-km area instead of 424 sq-km, which proved that it had no capacity to continue exploration work on such a large area.

“The Balochistan government has not signed any agreement with the TCCP which is at present running the Reko Diq project,” the sources said, adding that the Supreme Court which had taken up the case issued a number of notices to TCC Australia, but no-one from the company had appeared before it. The mining committee of the mines and minerals department of Balochistan had on March 5, 2011, rejected an appeal of the company seeking the mining licence on the grounds that it was incapable of working in such a large area.

“The company has not filed any review against the committee’s decision,” the sources said, adding that it had also not approached any court which showed that the company had accepted the committee’s decision.

The sources said the Balochistan government had already decided to run the project on its own and allocated Rs8 billion for it in the budget.